English for Manager

Human potential management : time to

move beyond the concept of human
resource management?

Arranged by :

1. Maulana Irham Syafi 7311416224

2. Bayu Adjie Indoyo 7311416126
The background :

Today, the concept of human potential management (HPM) and argues that
the old concept of human resource management (HRM) should be replaced
by HPM. Argues that treating human beings as a resource to be used,
utilized or manipulated like any other resource is demeaning. Further, with
the increasing number of highly skilled knowledge workers, resentment of
the word “resource” is likely to increase, since knowledge workers are
inclined to be hostile to manipulation. They would prefer the organization to
enable them to fulfil their true potential and, in so doing, help the
organization to achieve its objectives. Also presents a definition of HPM and
highlights the features which differentiate it from HRM.

The Objective :

To find the answer for “should organizations continue to treat people

unethically or should they utilize their employees’ (or partners’) superior
mental ability for their enhancement and through this achieve organizational
growth?”

Presents a definition of HPM and highlights the features which differentiate

it from HRM.

The methods :

Case study, because this research is conducted on a unity of the existing

system in the company and directed to collect data and gain understanding
of the case.

The results :

Based on the Journal conclusion, a review of the whole concept of HRM is

long overdue. Owing to recent rapid global technological changes, a large
percentage of the working population already seems to have reached the
threshold where rapid technological and economic. hence, it is time to move
from HRM to HPM and help organizations to change their mindset towards
this. HPM in this sense has to play a proactive role and this, itself, is the
challenge for the HPM professional in the present-day dynamic
environment.

Comments :

we agree to the journal’s conclusion that organization should move from

human resource management to human potential management. Because
we feel that Employees are less likely to see themselves as resources who
could be used, utilized or manipulated to achieve organizational objectives.
They would be more inclined to work in enabling organizations that will, in
turn, empower them to achieve their full potential. As we feel it when we
work in our organization and our home industry, we don’t like to be treated
as resources it’s feels like our work isn’t that appreciated and make us
stressed and not much motivation to do the work from the leader.
 Human potential management: time to move beyond the concept of
human resource management?

Satish Kumar Kalra Professor, Management Development Institute,

Gurgaon, India

Presents the concept of human potential management (HPM) and argues

that the old concept of human resource management (HRM) should be
replaced by HPM. Argues that treating human beings as a resource to be
used, utilized or manipulated like any other resource is demeaning. Further,
with the increasing number of highly skilled knowledge workers, resentment
of the word “resource” is likely to increase, since knowledge workers are
inclined to be hostile to manipulation. They would prefer the organization to
enable them to fulfil their true potential and, in so doing, help the
organization to achieve its objectives. Also presents a definition of HPM and
highlights the features which differentiate it from HRM.

Introduction

In the changing economic environment human resource management

(HRM) is assuming much greater importance than ever before. HRM was
conceived to be different from the traditional and conventional notion of
personnel administration; however, ever since the term HRM came into
currency (along with human resource development (HRD)), it has come in
for much criticism, because it is generally felt that to treat human beings like
any other resource is derogatory and demeaning. As Casse (1994)
comments: The definition of human beings merely as resources is obsolete,
demeaning and out of line with our sociological evolution. There is a strong
need to re-assess our definition of the people who are part of our business
workforce.

Other critics have felt that HRM is like putting old wine into new bottles, i.e.
it is merely changing the name from personnel administration to HRM, yet
retaining most of the traditional personnel administration functions. Apart
from these criticisms, a review of the concept in the context of the changing
environment and changing profile of human capital is long overdue.
Although critics of HRM have put forward some rational arguments, they
have not come up with any constructive suggestion or new concept to
replace HRM. This is analogous to the famous painter who once put one of
his new paintings on the wall of the town hall with a note that anyone noticing
any flaw in the painting should put a mark at the appropriate point. In the
evening when he came to see the painting, he was pained to see his
painting spoiled as it was full of marks. A few days later, he did another
painting and again put it on the wall of the town hall with a note saying that
anyone noticing any flaw should improve it. This time when he came back
in the evening, he found his painting intact without any mark. The moral of
the story is that in the absence of any other alternative appropriate
terminology, the terms HRM and HRD are still in vogue and have, in fact,
become much more popular then ever before. Understanding the
sentiments of the critics towards the term HRM and its disputed usage, an
attempt has been

made in this paper to develop a new terminology and concept for this key
aspect of management. But before this, a brief examination of the words
“resource” and “human” is given. According to The Concise Oxford
Dictionary (1982), resource is a “means of supplying some want or
deficiency, a stock or resource on which one can draw when necessary”. In
this sense, resource is something which can be manipulated or controlled
by management or the organization at its wish and to its advantage. This
itself seems to be undermining human beings, as a human is something that
is “opposite to animals, machines, mere objects, etc.”, because humans
have “superior mental development and power of articulate speech” (The
Concise Oxford Dictionary, 1982). Unfortunately, this aspect of “human”
seems to be missing in the definitions of HRM, owing to both the
overemphasis of the word “resource” and perhaps its connotations in
traditional notions of “personnel administration”, in which personnel were
“administered”. Therefore, although HRM was thought to be an
improvement, it still considered human beings as “resources” to be
managed, perhaps because it was felt that they were incapable of self-
management. In this sense, HRM deprives employees of using their
“superior mental development” and full potential as it assumes that, like any
other resource, human beings can be manipulated and exploited. Monday
and Noe (1990) define HRM as “the utilization of human resources to
achieve organizational objectives”. In this definition, it would appear that the
term “utilization” does not exclude utilization through coercion. In this sense,
therefore, utilization could lead to demoralization and to a lack of motivation
and, ultimately, be counter-productive to organizational growth and
development. This means that the concept of HRM is still about treating
human beings not only as a means to achieving organizational objectives,
but also as being peripheral to the organization. With this kind of mindset,
organizations are likely to see employees as just cogs in a wheel. All this
also raises an ethical question, i.e. should organizations manipulate human
beings by creating systems and structures which undermine the superior
mental ability of human beings? Casse (1994) feels that it is ethically wrong
to equate people with

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Satish Kumar Kalra Human potential management: time to move beyond

the concept of human resource management?

Journal of European Industrial Training 21/5 [1997] 176–180

resources and says, “people often resent being described in such terms”.
Elaborating on this point further, he says: The expression HRM immediately
relegates people into the category of corporate resources … It implies that
the corporation’s sole mission is to produce and sell goods and services in
order to make a profit, this goal to be accomplished by means of its various
resources – among them, the human beings. HRM conveys the idea that
people are employed in order to be used, that their raison d’être is not to
enjoy but to serve.

The question then is: should organizations continue to treat people

unethically or should they utilize their employees’ (or partners’) superior
mental ability for their enhancement and through this achieve organizational
growth? In fact, with improvements in education, skill levels and the overall
standard of living, the concept of utilizing the potential of partners (replacing
the word “employee” with “partner” may itself help to change the
organizational mindset) is assuming increasing importance; however, the
concept of HRM does not go far enough to reflect this changing economic
and social environment. Casse (1994) also points out that “the knowledge
partner cannot simply be treated as a piece of equipment that the company
and its senior executives move around according to their needs”. Therefore,
there is a need to create a new concept which fits in with present-day reality.
Although the concept of HRM was undoubtedly an improvement on the
traditional concept of personnel management which assumed “that human
beings are primarily motivated by comforts and salary and necessary
attention may be given to rationalize these so that people do not get
dissatisfied” (Pareek and Rao, 1981) and the HRM movement did make
progress away from this traditional view towards treating employees as
human beings with their own needs, motivation, expectations, etc., which,
as a result, made organizations look into these aspects to achieve their
objectives by satisfying some of these needs, organizations still treated
employees both as a means or a resource which needed to be “oiled” the
same as any other tool or machine, and as: a great asset in the organization.
They are not merely necessary evils to be reckoned with, but they can
contribute a great deal to the achievement of organizational goals (Pareek
and Rao, 1981) [emphasis mine].
The term “not merely necessary evils” still implies that, for organizations,
human resources are unavoidable evils and if they had any other option,
they would avoid using them. The move towards a greater degree of
automation in the workplace is a step in this

direction. Moreover, it is generally observed that whenever there is a

resource crunch in the organizations, its first axe falls on human resources
in terms of retrenchments, cuts in manpower development and training
budgets. In view of this, as long as organizations continue to look on human
beings as resources (in effect, necessary evils), they will aim to cut costs by
reducing these very resources, just as they try to reduce any other resource.
The term resource creates a mindset which undermines the value of human
beings to that of assets for whose good the organizations are created. In
that sense, it provides a blinkered view of human beings. In view of this,
employees as partners need to have a central focus in organizations and
should not be marginalized – not even at the mindset level, because it is the
mindset which can gradually change the whole focus. Labelling theory
suggests that terminology plays a vital role here. Casse (1994) makes this
point: Promoting the statement, “people are not mere resources”, is more
than just a semantic issue – it is indeed a conceptual one. For, if a corporate
leader defines the people who are working for the organization as human
resource then there is good chance that they will be treated merely as
“resources”.

The shift from personnel management/personnel administration to HRM

itself was a step in this direction, but as mentioned before, it is time to move
a step forward to keep in tune with the changing socio-economic reality. The
next section attempts this by developing the concept of human potential
management (HPM) to replace that of HRM.

Human potential management

As indicated above, the term resource, when used in the context of human
beings, creates a different kind of mindset and thus a different kind of
attitude and perception about human beings in organizations; therefore, it is
suggested that the term resource be replaced by “potential” and the new
concept of human potential management be created, whereby human
beings are the focus and are not seen as a mere resource. According to
The Concise Oxford Dictionary (1982), the term “potential” means “capable
of coming into being or action”. Human beings by nature are full of energy,
capable of thinking and equipped with superior mental abilities; therefore,
they are capable of being proactive as opposed to being reactive; their latent
energies can “come into being”. In fact, the dictionary definition of potential
also takes into account latent energy. By using their potential, human beings
are capable of taking charge of themselves. They need not

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Satish Kumar Kalra Human potential management: time to move beyond

the concept of human resource management?

Journal of European Industrial Training 21/5 [1997] 176–180

be directed by external influences. In fact, external influences could actually

kill potential (if not in all cases, at least in many cases). With the increase in
the number of knowledge workers, employees today would most likely be
inclined to develop and exploit their own potential unconditionally. This is
reinforced by the results of a recent study (Tampoe, 1993). The findings of
this study indicate that the biggest motivational factor for knowledge workers
is “personal growth” followed by “operational autonomy” and then by “task
achievement”. Among the four major motivators, money was the least
motivational factor. Personal growth is referred to as “the opportunity for
individuals to realize their potential”, and operational autonomy is defined
as “a work environment in which knowledge workers can achieve the tasks
assigned to them within the constraints of strategic direction and self-
measurement indices” (Tampoe, 1993, p. 51). Bower (1994) points out that
“The successful companies of the 1990s will be those which can motivate
employees to use their full talents for the firm”. Earlier, Bailyn (1985) felt that
alternative approaches to motivating knowledge workers were needed, as
traditional or conventional HRM approaches did not resolve the problem of
retaining a certain managerial control while at the same time allowing
creative and innovative autonomy. Tampoe (1993) provides some answers,
but to increase the influence of knowledge workers requires a review of the
HRM approach itself. This assumes much more importance in view of the
greater professional knowledge, skills and competence of today’s
workforce, making them more loyal to their profession at a time when
organizational loyalty is likely to be more dependent on the organization’s
ability to provide and create opportunities for the use and development of
their potential. In other words, they are less likely to be motivated or remain
motivated by salary, comforts, expectations, etc., alone. Modern-day
organizations continuously have to look beyond these and create conditions
for their partners (employees) in which they can achieve their full potential
and thus facilitate the attainment of organizational objectives. Organizations
have to adopt the approach of HPM rather than that of traditional HRM. The
following definition of HPM further crystallizes the concept: human potential
management is an integrative and continuous process of enhancing human
capabilities and capacities by enriching human beings’ existing potential
and helping them to discover and tap their latent potential through micro-
level human development interventions and macro-level systems and policy
interventions to create and sustain an envi

ronment that facilitates individuals in achieving their full potential to their

own as well as the organization’s advantage. The above definition of HPM
has the following distinctive features: • HPM focuses on self-management.
It has an underlying belief that if human beings are provided with
opportunities to use their potential, they can manage themselves. This is
contrary to the belief system underlying HRM which says that human beings
have to be managed (utilized/used) to achieve organizational objectives. •
HPM does not use human beings as a resource, but recognizes their
potential and enables them to utilize their potential. • HPM is an integrative
and continuous process of enhancing human capabilities and capacities. In
this sense, it is different from HRM, which does not essentially see various
interventions as integrative and as a whole the focus is on the use of human
beings as a resource; therefore, most of the interventions are more often
than not seen as strait-jacketed applications of HRM or HRD. In that sense,
HRM has more of a “maintenance” kind of mindset, whereas HPM follows a
continuous-growth-oriented approach. • HPM focuses more on turning
employees’ potential to their own advantage, thereby leading automatically
to the organization’s advantage. In this sense, HPM underplays the
organization’s advantage by implying that if employees’ potential is taken
care of, it is likely to enhance employees’ sense of responsibility towards
organizations and create a feeling of organizational ownership
(partnership), which could automatically lead to the achievement of
organizational objectives/goals. • Given the current dynamic environment,
HPM also focuses on the continuous updating of organizational policies,
structures and systems in such a way that it helps employees to achieve
their full potential and to contribute their best to the organization.

Given these distinctive features, HPM is a step forward from Miles’ (1975)
three alternative theories of management and provides a fourth model or
theory. In terms of assumptions, policies and expectations, it can be added
as a fourth model as shown in Table I.

Conclusion

Based on the above discussion, a review of the whole concept of HRM is

long overdue. Owing to recent rapid global technological changes, a large
percentage of the working population already seems to have reached the
threshold where rapid technological and economic
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[ 179 ]

Satish Kumar Kalra Human potential management: time to move beyond

the concept of human resource management?

Journal of European Industrial Training 21/5 [1997] 176–180

Table I Miles’ (1975) three alternative theories of management model and

proposed model of human potential

Alternative theories of management Traditional modelHuman relations

modelHuman resources modelHuman potential model

Assumptions Work is inherently distasteful to most peoplePeople want to

feel useful and importantWork is not inherently distasteful. People have
much more potential than generally visible What workers do is less
important than what People desire to belong and to be People want to
contribute to at surface level and they want to use their full they earn for
doing itrecognized as individualsmeaningful goals which they have potential
for their own and their organization’s Few want or can handle work which
requires These needs are more important than money helped to
establishgrowth and development creativity, self-direction, or self-controlin
motivating people to workMost people can exercise far moreMost people
look for the fulfilment of their potential creative, responsible self-direction
and can be self-directive in meaningfully achieving and self-control than
their presenttheir organization’s objectives through their own jobs
demandself-fulfilment

Policies The manager’s basic task is to closely The manager’s task is to

make each worker The manager’s task is to make use of Managers’ basic
task is to facilitate their colleagues supervise and control his
subordinatesfeel useful and importanthis “untapped” human
resources(people/partners) in enabling them to achieve their He must break
tasks down into simple, He should keep his subordinates informed He must
create an environment in full potential repetitive, easily learned
operationsand listen to their objections to his planswhich all members may
contribute Managers must create an environment which He must establish
detailed work routines and The manager should allow his subordinates to
the limits of their abilityfacilitates people taking charge of themselves
procedures and enforce these firmly but fairlyto exercise some self-direction
and self-He must encourage full participation and using their full potential
control on routine matterson important matters, continually Managers must
facilitate people discovering and tapping broadening sub-ordinate self-
directiontheir latent potential, so that they continuously and controlenhance
their capabilities and capacities to their own as well their organization’s
growth and advantage

Expectations People can tolerate work if the pay is decentSharing

information with subordinates Expanding subordinate influence, self-
Enhancing human potential will lead to and the boss is fairand involving
them in routinedirection, and self-control will lead enhancement of
individuals’ sense of If tasks are simple enough and people aredecisions
will satisfy their basic to direct improvements in operatingresponsibility and
organizational ownership closely controlled, they will produceneeds to
belong and to feel importantefficiencySelf-direction and self-control
achieved through up to standardSatisfying these needs will improve morale
Work satisfaction may improve as a “by-continuous enhancement of
potential may lead to and reduce resistance to formal product” of
subordinates making full increased sense of satisfaction, commitment and
authority – subordinates will “willinglyuse of their resourcesworth among
people in organizations and thus may co-operate”help organizations in
achieving their goals/objectives.

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[ 180 ]
Satish Kumar Kalra Human potential management: time to move beyond
the concept of human resource management?

Journal of European Industrial Training 21/5 [1997] 176–180

development have led to the satisfaction of their comfort-oriented needs and

expectations through improvement in economic status. This is also reflected
in Tampoe’s (1993) study in which he points out that: Significantly lower
importance placed by the respondents on monetary rewards … is due in
part to the fact that they all earned well above the national average wage
and that money in its varying forms must be considered as having little
incremental value as a motivator, even if it is related to individual
performance, unless the potential earnings are very significant.

In general, Tampoe’s (1993) observation can be seen as a trend-setter in

this direction and also a pointer towards the fact that with improved quality
of working life and quality of life in general, factors such as personal growth
and operational autonomy are gradually likely to play a vital role in
motivating tomorrow’s more skilled and knowledgeable workforce.
Employees are less likely to see themselves as resources who could be
used, utilized or manipulated to achieve organizational objectives. They
would be more inclined to work in enabling organizations that will, in turn,
empower them to achieve their full potential. This will happen only if
organizations start treating people as partners. According to Casse (1994),
“the time has come to look at people in the corporation not

as mere resources but as real partners”. Hence, it is time to move from HRM
to HPM and help organizations to change their mindset towards this. HPM
in this sense has to play a proactive role and this, itself, is the challenge for
the HPM professional in the present-day dynamic environment.

References Bailyn, L. (1985), “Autonomy in the industrial R&D lab”, Human

Resource Management, Vol. 2. Bower, D.G. (1994), “Unleashing the
potential of people”, Journal of European Industrial Training, Vol. 18 No. 7,
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Industrial Training, Vol. 18 No. 5, pp. 23-6. The Concise Oxford Dictionary
(1982), 7th ed., Sykes, J.B. (Ed.), Oxford University Press, Bombay. Miles,
R.E. (1975), Theories of Management: Implications for Organizational
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